Causa latet: vis est yiotissima.
That our merchant marine has declined is notorious, but the cause is hidden; at least, from the different remedies proposed, it may be supposed that the cause is not apparent to all. In order to trace the causes which have tended to produce the decline, it will be necessary to review somewhat the history of American shipping. Before the introduction of steam as the propelling power we had practically no rivals in shipbuilding, and England was our only rival in the carrying trade. In 1838 the Great Western made her first trip across the Atlantic, the first successful passage, under steam, across the ocean. From this time forward steam became of importance, until at the present time it has almost entirely superseded sail-power, except as an auxiliary. We were much slower than the English in adopting this method of propulsion for ocean vessels. In 1848 our steam shipping amounted to only 16,000 tons, but in 1851 we had nearly caught up to our rival, whose steam tonnage then amounted to 65,921 tons engaged in the foreign trade. This growth steadily continued until 1855, when our steam tonnage in the same trade amounted to 115,000 tons.
Then commenced the decline, which was slow at first, and in 1862 we had 114,000 tons. The decline in shipbuilding commenced about the same time, as is shown by the decrease in the sales to foreigners, falling from 65,000 tons in 1855 to 17,000 in i860. Next came the war, since which our shipbuilders have been mostly employed supplying the demands of our coasting trade; the sales to foreigners have been small, there have been built for our foreign trade but a few vessels, and these can hardly be called a paying investment to their owners. The Brazil line stopped with its subsidy. The Pacific Mail is in a most dubious condition, and the Pennsylvania line have not added to the original number of American-built vessels, but instead are using the Clyde-built steamers flying the English flag.
After the war commenced our shipping declined rapidly; many ships were destroyed by rebel cruisers, but many more were lost to us by whitewashing. Any flag was better than the "stars and stripes," and from 1862 to 1865 our loss by sales, real or pretended, amounted to 824,652 tons, or more than one-fourth of all the registered tonnage of the United States at the outbreak of the war.
In 1861 our entire tonnage was 5,539,813 tons, and in 1880 only 4,008,035 tons, a reduction of over 26 per cent., and this in spite of the enormous increase in our exports and imports. The following table shows the American and foreign tonnage entered at the ports of the United States from foreign countries in the following fiscal years, viz.:
American in excess
Foreign in excess
The following shows the percentage of decrease in our merchant marine, including registered, enrolled and licensed vessels. In 1876 the decrease was 11.83 percent.; in 1877,0.86; in 1878,0.70; in 1879, 1.02, and in 1880 it was 2.43 per cent.
The following is the official statement of our merchant marine on June 30th, 1880:
Number of vessels registered, 2,378
Number of vessels enrolled 16,410
Number of vessels licensed 4,924
Total number of vessels, 24,712 = 4,068,035.
Of these 4717 are steamers, 132 being registered; of the registered steamers, 44 are built of iron. Our once immense whaling fleet consists of 174 vessels=38,408 tons.
For the year ending June 30th, 1880, the following is the report of vessels built:
Sailing vessels 460=590,571.9 tons, 1 of iron,
Steamers 3481=788,537.0 tons, 30 tons of iron of these eleven are ocean steamers.
All the authorities agree, and statistics show that our merchant marine engaged in foreign trade has greatly declined, and this in the face of an enormous increase in our exports and imports. Our commerce is very large but our carrying trade is very small. The statistics show that we first fell behind Great Britain after the successful introduction of steam, but soon overtook her again, and continued advancing until 1855, when commenced again a slow decrease, which continued until the outbreak of the rebellion. From this time until 1865 the decline was rapid, since then there have been slight increases, but terribly small in proportion to our commerce, and in the last few years there has been a decrease, and at an increasing rate, threatening a complete extinction of our foreign carrying trade.
PROGRESS OF BRITISH SHIPPING.
The progress of British shipping affords a sharp contrast to the above, and a useful lesson may be drawn from an account of it. The number and registered tonnage of vessels remaining on the register at the end of the year 1879 were as follows:
Number of steam vessels, 6,629; tonnage, 2,733,269
Number of sailing vessels, 32,662 ; tonnage, 51729,095
Total, 39,291 ; tonnage, 8,462,364
The greater effectiveness of British tonnage, arising from the rapid increase of steam vessels as compared with sailing vessels, is vividly shown in the table of entries and clearances. It appears that there was an increase of 2,173,000 tons in the entries, and of 1,652,000 tons in the clearances of British ships, and an increase of 368,000 tons in the entries, and 70,000 tons in the clearances of British sailing ships at ports in the United Kingdom in one year. On the other hand, there was a decrease of 730,000 tons in the entries, and 834,000 tons in the clearances of foreign steamships at ports in the United Kingdom. The entries of British ships show an increase in tonnage of 3 per cent, and the clearances an increase of 2 per cent, over 1878; whereas the entries of foreign ships show a decline of over 3 per cent, and the clearances of over 7 per cent, as compared with the same year.
It appears that in i860 the tonnage of the British Empire was 5,710,968 (sailing and steam), and the tonnage of the principal foreign maritime nations, excluding the river tonnage of the United States, was about 7,000,000 (sailing and steam). Allowing a steam ton to be equal in effectiveness to about four sailing tons, the tonnage of the British Empire was equal in effectiveness to 7,211,000 tons, whilst the tonnage of foreign countries was equal in effectiveness to 8,000,000.
In 1879, however, the tonnage of the British Empire was about 8,500,000, and the tonnage of the rest of the world was about 8,200,000. Allowing as before for the superior effectiveness of steam tonnage, it is found that the tonnage of the British Empire is equal in effectiveness to 16,000,000 tons, whilst the tonnage of the rest of the world is equal only to about 11 or 11 ½ million tons. In 1860 the tonnage of the British Empire represented about 47 per cent, of the tonnage of the world, and in 1879 it represented 58 per cent.
CAUSES OF THE DECLINE: INTRODUCTION OF STEAM.
The first blow to our success was evidently the introduction of steam as a motive-power. The shipbuilders of Great Britain, struggling with difficulty to compete with our shipbuilders, seized upon steam as a means of advance. At first they were able to supply the workmen, while in America skilled labor was very scarce, but in ten years we had again caught up with Great Britain. But now steamship lines took the place of the old packet lines, and although more expensive to build and run, they were so much more effective as to be able to carry much greater quantities of freight for the same length of time.
In 1856 the second blow was felt by the growing demand for iron ships. Still this demand was not so pressing as to be injurious to our carrying trade, and in 1862 we had only lost 1000 tons. But our shipbuilders felt it severely; the sales to foreigners declined very rapidly from 65,000 in 1855 to 17,000 in 1860. Here again the English shipbuilders got a good start, as they had both plenty of skilled workmen and cheap and accessible materials. The tables were turned on our shipbuilders, and now they had greater difficulties to strive against than the British formerly had been unable to overcome.
Now came the crushing blow to our merchant marine, the rebellion of the Southern States. Our carrying trade was still large; we not only carried for ourselves, but for foreigners as well. Our navy was insignificant, and all its efforts were required to blockade the southern coast and to capture rebel ports. Our shipping was left unprotected, many vessels were captured, many destroyed, and large numbers changed their flag, so that the capital invested in them might be secure. Owing to this, we found at the close of the war that our foreign carrying-trade was nearly destroyed; not only that which we formerly carried for other nations, but even our own goods were carried in foreign bottoms. When the tonnage we had left came to compete again with that of foreigners in the general market, the vessels were found to be behind the age; the demand was for iron vessels; wooden ones found it hard to find cargoes and then only at very low freights, while at the same time they were more expensive to run than iron vessels. Our shipbuilders had either been without work or engaged building vessels for the government. The building of these makeshifts was of little aid in learning the problem of iron shipbuilding. While we had been perforce idle, the British had made immense strides, and to attempt to compete with them was almost, if not quite, impossible; also, a new building material had been introduced, mild steel was extensively used for ships, and at the end of the war we were without steel works.
THE NAVIGATION LAWS.
Now came into play with dire effect the Navigation Laws. These laws prevented the replacing of old types of vessels with new, as they forbid the American flag flying on foreign bottoms. Of these laws. Prof. Sumner says: "It is necessary, however, to go to Turkey or Russia to find instances of legislative and administrative abuses to equal the existing laws and regulations of the United States about ships, the carrying trade, and foreign commerce. These laws have been brought to public attention again and again, but apparently with little effect in awakening popular attention, while the newspapers carry all over the country details about abuses in Ireland, Russia and South Africa. We should stop bragging about a free country, and about enlightened power of the people in a democratic republic to correct abuses, while laws remain which treat the buying, importing, and sailing of ships as pernicious, or at least doubtful and suspicious actions." The following are the more important of these laws.
Section 4131. Vessels registered pursuant to law, and no others, except such as shall be duly qualified, according to law, for carrying on the coasting trade and fisheries, or one of them, shall be deemed vessels of the United States, and entitled to the benefits and privileges appertaining to such vessels; but they shall not enjoy the same longer than they shall continue to be wholly owned by citizens and to be commanded by a citizen of the United States. And officers of vessels of the United States shall in all cases be citizens of the United States.
Section 4132. Vessels built within the United States, and belonging wholly to citizens thereof, and vessels which may be captured in war by citizens of the United States, and lawfully condemned as prize, or which may be adjudged to be forfeited for a breach of the laws of the United States, being wholly owned by citizens, and no others, may be registered as directed in the Title.
Section 4133. No vessel shall be entitled to be registered, or, if registered, to the benefits of registry, if owned in whole or in part by any citizen of the United States who usually resides in a foreign country, during the continuance of such residence, unless, etc.
Section 4134. No vessel shall be entitled to be registered as a vessel of the United States, or, if registered, to the benefits of registry, if owned in whole or in part by any person naturalized in the United States, and residing for more than one year in the country from which he originated, or for more than two years in any foreign country, unless, etc.
Section 4135. No vessel which has been recorded and registered as an American vessel of the United States, pursuant to law, and which was licensed or otherwise authorized to sail under any foreign flag, and to have the protection of any foreign government during the existence of the rebellion, shall be deemed or registered as a vessel of the United States, etc.
Section 4136. The Secretary of the Treasury may issue a register or enrollment for any vessel built in a foreign country, whenever such vessel shall be wrecked in the United States and shall be purchased and repaired by a citizen of the United States, if it shall be proved to the satisfaction of the Secretary that the repairs put upon such vessel are equal to three-fourths of the cost of the vessel when so repaired.
Section 4142. This section contains the oath required from the owner before registration. This oath declares that everything is in conformity with the foregoing statutes. The final clause is worthy of notice: "That the person so swearing is a citizen of the United States, and that there is no subject or citizen of any foreign prince or state, directly or indirectly, by way of trust, confidence or otherwise, interested in such vessel, or in the profits or issues thereof, etc.
Section 4165. No vessel which is registered, pursuant to any law of the United States, and which is seized and captured and condemned, under the authority of any foreign power, or which by sale becomes the property of a foreigner, shall be entitled to or capable of receiving a new register, notwithstanding such vessel should afterward become American property; but all such vessels shall be taken and considered, to all intents and purposes, as foreign vessels, etc.
Section 4172. If any vessel registered as a vessel of the United States shall be sold or transferred, in whole or in part, by way of trust, confidence, or otherwise, to a subject or citizen of any foreign prince or state, and such sale or transfer shall not be made known, as hereinbefore directed, such vessel, together with her tackle, apparel, and furniture, shall be forfeited, etc.
Section 4180. Every vessel built in the United States, and belonging wholly or in part to the subjects of foreign powers, in order to be entitled to the benefits of a ship built and recorded in the United States, shall be recorded in the office of the collector of the district in which such vessel was built in the manner following, etc.
There are three ways of recording vessels entitled to carry the American flag. By register the vessel is entitled to carry on the foreign trade. Vessels owned and officered by citizens of the United States and built there, or captured by citizens, or condemned for breach of law, or wrecked vessels on which the cost of the repairs has amounted to three-fourths the value of the vessel, and no others,
are entitled to register.
All vessels not registered, if above 20 tons, must be enrolled; the restrictions are the same as for a registered vessel. All vessels below 20 tons and all enrolled vessels carrying on the coasting trade are licensed. No foreign vessel can carry on the coasting trade, and trading between Atlantic and Pacific ports is considered as coming under the head of coasting. No enrolled or licensed vessel must visit a foreign port without special permission, nor can they carry on the foreign trade without being registered.
Nearly all the laws under Title XLVIII hamper our merchant marine. Some are injurious without any apparent excuse for their existence, such as those preventing the investment of foreign capital in American vessels. Others have been passed in order to benefit some other business; such as prohibiting the American flag to any but American-built ships. This was done in the interest of the shipbuilders, and has aided in crushing them. Some are necessary for the prevention of attempts to defraud the revenue, and are necessary as long as we maintain a high tariff.
The war severely stretched the purse-strings of the nation, and it was necessary to raise money by taxation in every direction. So the capital invested in shipping was taxed. The following are extracts from the Revised Statutes, showing the laws for this taxation:
Section 4219. Upon vessels which shall be entered in the United States from any foreign port or place there shall be paid duties as follows: On vessels built within the United States but belonging wholly or in part to subjects of foreign powers, at the rate of thirty cents per ton; on other vessels not of the United States, at the rate of fifty cents per ton. Upon every vessel not of the United States, which shall be entered in one district from another district, having on board goods, wares, or merchandise taken in one district to be delivered in another district, duties shall be paid at the rate of fifty cents per ton. Nothing in this section shall be deemed in anywise to impair any rights or privileges which have been or may be acquired by any foreign nation under the laws and treaties of the United States relative to the duty of tonnage on vessels. On all foreign vessels which shall be entered in the United States from any foreign port or place, to and with which vessels of the United States are not ordinarily permitted to enter and trade, there shall be paid a duty at the rate of two dollars per ton; and none of the duties on tonnage above mentioned shall be levied on the vessels of any foreign nation if the President of the United States shall be satisfied that the discriminating or countervailing duties of such foreign nations, so far as they operate to the disadvantage of the United States, have been abolished.
In addition to the tonnage duty above imposed, there shall be paid a tax at the rate of thirty cents per ton, on vessels which shall be entered at any custom house within the United States from any foreign port or place; and any rights or privileges acquired by any foreign nation under the laws and treaties of the United States relative to the duty of tonnage on vessels shall not be impaired; and any vessel, any officer of which shall not be a citizen of the United States, shall pay a tax of fifty cents per ton.
Section 4220. No vessel belonging to any citizen of the United States, trading from one port of the United States to another port within the United States, or employed in the bank, whale, or other fisheries, shall be subject to tonnage tax or duty, if such vessel be licensed, registered or enrolled.
Section 4223. The tonnage duty imposed on all vessels engaged in foreign commerce shall be levied but once within one year, and when paid by such vessel, no further tonnage tax shall be collected within one year from the date of such payment. But this provision shall not extend to foreign vessels entered in the United States from any foreign port, to and with which vessels of the United States are not ordinarily permitted to enter and trade.
The above taxation falling at a time when the carrying trade had already received such severe blows, aided in the decline. State taxation is also a severe burden, but Pennsylvania extorts no tax, and there is a move to repeal such taxes in other States. There is also an indirect tax on shipping, in that certain articles which enter into the composition of ships are still taxed. The following sections show what articles are on the free list:
Section 2513. All lumber, timber, hemp, manila, and iron and steel rods, bars, spikes, nails and bolts, and copper and composition metal, which may be necessary for the construction and equipment of vessels built in the United States for the purpose of being employed in the foreign trade, including the trade between the Atlantic and Pacific ports of the United States, and finished after the sixth day of June, eighteen hundred and seventy-two, may be imported in bond, under such regulations as the Secretary of the Treasury may prescribe; and, upon proof that such materials have been used for such purpose, no duties shall be paid thereon. But vessels receiving the benefit of this section shall not be allowed to engage in the coastwise trade of the United States more than two months in any one year, except upon the payment to the United States of the duties on which a rebate is herein allowed.
Section 2514. All articles of foreign production needed for the repair of American vessels engaged exclusively in foreign trade may be withdrawn from bonded warehouses free of duty, under such regulations as the Secretary of the Treasury may prescribe.
Great weight is given by all free ship advocates to the fact that our Atlantic steamship companies had failed before the outbreak of the war; from this they draw the conclusion that even then the high price of our ships had ruined the carrying trade. But have they been entirely fair in their arguments? As we had been so successful in steamships up to 1857, it is reasonable to suppose that their cost did not differ greatly from foreign steamers, nor was there much difference in the running expenses. Then, competing foreign lines had commenced to build iron steamers, but they had not been able to replace the wooden ones. So it was too early to expect that their introduction, at a much cheaper rate than we could hope to build for, should ruin our steamship companies. It seems as if some other cause must be sought, and subsidies seems to suit the case. With Great Britain's system of subsidies, our carrying trade was doomed to decrease, after the introduction of steam. It is doubtful if any fast mail lines have found steamers paying property, leaving subsidies out of consideration. In our present case the Pacific Mail seemed about to fail after the withdrawal of the subsidy, but much of the stock changed hands, the entire management was changed, and it is now run in the interest of a railroad company.
The Oriental and Occidental Steamship Company, chartering English steamers, is managed by the officials of the same railroad. This road can afford to run the steamers even if at a loss, as the railroad freights pay well. The same may be said for the Pennsylvania Steamship Company, The Roach line to Brazil has been withdrawn lately, not being able to compete with English subsidized lines. While, if we had not forbidden the purchase of foreign ships, we could have struggled much longer; free ships alone would not have enabled us to compete against subsidized lines, but they might have allowed us to compete on routes not occupied by such lines, and to have opened new routes.
The causes of the decline of our merchant marine may be summed up as follows: The introduction of steam as a motive power, the introduction of iron as the principal material for construction, the payment by Great Britain of large subsidies, the rebellion of the Southern States, the Navigation Laws, and taxation, both by the general government and by the States. The difficulties incurred in introducing steam were soon overcome; whether the difficulties of introducing iron would have been overcome at all it is not easy to say, for the war followed the introduction so closely that our shipbuilders had made no efforts; but it is possible that iron might have been as successfully introduced as steam if the conditions had remained the same. But during the hiatus caused by the war our shipyards were idle or building makeshifts for the government, and there was no chance for the gradual introduction of iron. At the close of the war iron had been well established as the best material, and the yards of Great Britain were supplying the immense demand. Then were felt in full force the Navigation Laws; the carrying trade was weak, and felt the effect of such laws as trammeled the traffic and inflicted taxation. And those laws which prevented our merchants purchasing foreign built ships completed the ruin. Although our merchants could not have competed with the subsidized lines, they had many other accustomed channels open, which they might have continued to occupy had they been able to purchase iron steamers for a reasonable price.
MEANS TO BE TAKEN FOR ITS REVIVAL.
To revive our merchant marine it is necessary to make the carrying trade profitable to American merchants and to make ships valuable property to own,—property which is secure and returns a fair interest on the capital invested. How to do this is a very vexed question. The adherents of the different schemes may be arranged on two sides: that of the Free Ships on the one hand and Subsidies on the other.
The followers of the doctrines of free ships are free traders, and are reinforced by most writers on political economy. The argument for free ships has all the weight of free trade at its back; and free trade in all things, or at least a tariff for revenue as against a tariff for protection, has been presented so strongly by all political economists since the time of Adam Smith, and the facts so fully prove the theory, that the only wonder is how it is possible that the people can take so long to learn a lesson so well taught. But this lesson of political economy is not the only one we refuse to learn, nor do we take advantage of the experience of others. Look at the system of sewerage in the national capital, where the plan of building immense sewers is being followed at an enormous expense, in spite of the fact that numerous cases in England have shown that large sewers are as unhealthy as they are expensive, and that small ones do their work properly where large ones fail.
David A. Wells has written one of the most exhaustive articles on Free Ships; in this he says: "If by reason of natural conditions and circumstances the exports and imports of the United States can be transported more cheaply and conveniently by the people and vessels of foreign countries than by our own people and vessels, it would be fighting against nature and a waste of resources to attempt to have it otherwise by paying subsidies, or what is the same thing, hiring people to do what naturally it is not for their interests to do. But if on the contrary our inability to compete with foreigners in the carrying trade of the ocean is the result of our own bad management and stupidity, then the failure so to do is such a loss of opportunity and waste of resources as would, if general, result in complete national impoverishment and decrepitude." And he shows very plainly that in his opinion it is the result "of our own bad management and stupidity," and makes out a fair case; but while he maintains the opinion, he fails to show that the repeal of the Navigation Laws and the free admission of foreign ships to American registry will re-establish our carrying trade. Prof. Sumner in a concise and lucid article in the North American Review lays down the dictum of Free Ships as governed by the laws of free trade. He says: "On the other hand, the emancipation of foreign commerce from all trammels of every sort is the only means of increasing the natural, normal. and spontaneous support of carrying and shipbuilding, assuming that the carrying trade and shipbuilding are ends in themselves." Again, "I have said above that, if there were no restraints or interferences, we should simply notice whether any Americans took to the carrying trade or not, and should thence infer that they might or might not be better employed in some other industry. It is impossible now to say whether, if all restrictions were removed, the carrying trade or shipbuilding would be profitable industries in the United States or not. Any opinion given by anybody on that point is purely speculative." Again, "It is, however, no object at all for a country to have either shipbuilding industry, or carrying trade, or foreign commerce. Herein lies the fundamental fallacy of all the popular and congressional discussions about ships and commerce. It is only important that the whole population should be engaged in those industries which will pay the best under the circumstances of the country." Thus he thinks the only way to increase our marine is to repeal all the laws which trammel the carrying trade; but he is not by any means certain that this will accomplish the result, and furthermore he sees no object in attempting to increase our merchant marine. This is the extreme doctrine of those political economists who believe in a free government. They believe that most legislation is hurtful, and that none is right except such as is necessary to protect the citizens of a State from external and internal enemies, against foreign foes and domestic criminals; also any legislation which trammels one trade injures all. As to the necessity of a carrying trade, of shipbuilding, or of foreign commerce. Prof. Sumner would be undoubtedly right if the millennium had arrived, but for modern times the argument is too ethereal. As the present subject is really the carrying trade and only relates to shipbuilding and foreign commerce in so far as they affect the carrying trade, it will be necessary to show the desirability of increasing the former. A war always seems improbable until we are in the midst of one. Look at our late war; it was declared imminent many years before it came, and when it did come the great rebellion was looked upon as a trifling insurrection. A war with Great Britain seems improbable, but it is within the bounds of the possible. In the present state of the carrying trade it is hard to imagine how terrible would be the state of the country in case of such a war. It would be sufficiently unfortunate in any case, as are all wars, but as we now are it would be most disastrous. Look at our grain trade; not only would it lose one market, but all markets would be cut off for want of vessels to do the carrying, for at the present time Great Britain has seven eighths of that trade. Our grain trade has reached enormous proportions. Every day we hear of blockades at the great ports, elevators full, and long lines of heavily ladened cars lying idle waiting for storage room. The farmers could not sell their grain, railroads would lose freights, they would have less power to purchase, "money would cease to circulate freely, and all business would be paralyzed at a time when the country most needed money. Furthermore, it is to our merchant marine that the navy must look for assistance in emergencies. Without a merchant marine, where could we look for seamen, for transports, for supply vessels? What would we have done in the late war without our merchant marine? Of course, if we have reached the millennium no navy is needed, either for attack or for defense. The adherents of subsidies are full of reasons for establishing a carrying trade, they flaunt patriotism in the face of their opponents, they quote the immense sums paid to foreigners for carrying our exports and imports, and declare this is theft from our own citizens. But these reasons are not sound. True, we pay immense sums to foreigners to do our carrying, but that is because it is cheaper to hire than to perform the work ourselves. The capital that would be required to do our own carrying brings a better return as it is employed, and more than balances the amount spent in hiring foreign bottoms. The real reason why it is important to establish a merchant marine is the necessity of providing for the occurrence of war. To provide reasonable security to our commerce against being overwhelmed and crushed by war is why we need ships flying the American flag.
Herbert Spencer, who is now at the head of all political economists, and who is a strong advocate of free government, even he says that it is admissible to protect certain branches of manufactures, etc., when necessary to encourage them for the protection of the state. Our commerce is strong enough to increase rapidly in spite of bad legislation; our shipbuilding is struggling along by the aid of our coasting trade, where foreign competition is forbidden, but our carrying trade is sick nigh unto death. Heroic measures are necessary for revival, and free ships alone will not effect a cure.
The followers of the doctrine of free ships have one great advantage on their side, they appear to be giving disinterested counsel; but with those who follow subsidies there is always the appearance of interested motives, and often with good cause. Indeed, with us the trial of subsidies has been exceedingly unsuccessful. But has it ever been fairly tried? The amount of the subsidy has usually been small, and it has required each session of Congress great effort and expense to have the money granted. It is not possible to conduct business on a sound basis when such an important factor is doubtful.
The cause of the failure of our subsidized lines is that they have had to compete with lines already more highly subsidized, and with a country at their back ready to increase the amount if necessary. The repeal of the acts which prevent free trade in ships, in the materials which enter into their construction, and which impose taxation, would not allow the American capitalist to compete with the Europeans who have already large amounts invested in ships and are aided by their governments with large subsidies. We must subsidize American steamship lines.
The following shows the necessity of subsidies to British steamers which can be built so much more cheaply than our own. In a review by the Postmaster-General, Lord Montrose, upon the condition of the affairs of the Royal Mail S. S. Company, he expresses forcibly the absolute necessity of a subsidy for the maintenance of that company, as also the Peninsular and Oriental S. S. Company. He says, "In my report upon the accounts of the P. and O. Co., I showed that the revenue, exclusive of subsidy, which the company expected to earn in the performance of the services required from them, would cover only 85 per cent, of the expenditures proper to those services." "The actual revenue, exclusive of subsidy, of the R. M. Co , in the year 1864, the period of their greatest prosperity, amounted to 90 per cent, of their expenditures, but in the following year it fell to 85 per cent., and in the next to 79 per cent., whilst in the present year it will be barely 70 per cent, of their expenditure."
Subsidies paid by the French Government for the same year amount to 23,388,892 francs.
The great trouble with those who argue for subsidies is their want of candor; they profess that they oppose the doctrine of free ships in the interest of shipbuilding when they really advocate subsidies in the interest of ship-owners. They proclaim as a fact that ships can be built as cheaply in the United States as in Great Britain. Then why oppose free ships? Hill says: "Great Britain can no longer claim to be the cheapest ship market in the world. . . . The cost of English-built iron ships complete is £I3 10s. to £14 per ton. The offer has been publicly made to build, in this country, ships of like specifications for the same amount currency, viz., $67.50 to $70 per ton, and guarantee an A 1 rate 20 years. In 1870 this could not be done, hit it can be to-day'' If we can build as well and cheaply as the English, which is better and cheaper than any other nation, free ships would not injure our shipbuilders. But this is not true. The Pennsylvania Co., which commenced with American-built steamers, is carrying much of its freight in English-built steamers. Mr. Hill says the cost of the necessary labor is from 50 to 60 per cent, of the entire cost of an iron steamer. Mr. Roach says it is about 60 per cent. Mr. Roach, when interviewed on the occasion when he had trouble with his employees, produced a table from "Young's Labor in Europe and America" to show how much he had to struggle against, and it conclusively proves that it is impossible to build as cheaply in this country as in Great Britain under existing circumstances. The following is the table:
United States England
Shipsmiths $15.95 $6.05
Angle-iron Smiths $13.20 $6.29
Helpers $8.80 $3.75
Platers and Fitters $13.20 $6.40
Calkers $9.35 $5.32
Laborers $7.70 $3.38
Rivet boys $3.30 $1.69
Carpenters and Boatbuilders $13.20 $6.53
Joiners $12.65 $6.53
Painters $12.10 $7.32
Riggers $11.00 $6.20
Planers $8.80 $5.68
Punchers $8.80 $5.00
Riveters $11.00 $5.20
Steam Engine Department
United States England
Draftsmen $19.80 $8.22
Patternmakers $14.30 $6.41
Engine Blacksmiths $13.20 $6.59
Helpers $8.80 $3.87
Finishers $13.20 $5.86
Turners $13.20 $6.05
Planers $13.20 $6.25
United States England
Fitters $13.20 $6.47
Riveters $11.00 $5.44
Calkers $9.35 $5.00
Holders on $8.25 $4.00
Laborers $7.26 $3.38
Boys, heaters and passers $3.30 $1.25
Flange Turners $16.50 $6.20
United States England
Loam Moulders $16.50 $6.50
Green-sand Moulders $13.20 $6.37
Melters $13.20 $6.00
Helpers $7.70 $4.00
United States England
Brass Moulders, $14.30 $6.15
Melters, $8.80 $5.50
Chippers, $11.00 $4.00
Laborers, $7.70 $3.35
Total weekly wages, 36 men, $406.01 $192.60
Weekly wages of 2000 men. $22,556.00 $10,700.00
(at same average)
This shows that wages are over double as much in the United States as in Great Britain. Now even if the raw material is as cheap in our country as in Great Britain, a vessel there would cost about five-eighths what it would cost in this country. From a table in "Our Merchant Marine" can be seen what one American shipyard has accomplished. It shows that $14,000,000 were paid for labor and only $890,147 for material: a shipbuilder in Great Britain would have had to pay less than $7,000,000 for the same amount of labor.
Shipbuilding is so closely united with the carrying trade that it is hard to sever their interests; and as our carrying trade was strangled in the interest of the shipbuilders, so it has reacted on them, and would have entirely destroyed them but for our coasting trade. When it comes to the foreign trade, shipbuilders must give way, even if they consult only their own interests. There will be no foreign carrying trade unless our capitalists can buy ships as cheaply as those of other nations; and it would be better for the shipbuilders to have a carrying trade, even if all were foreign bottoms, for then they would have the repairs, and there would be a demand for their ships when labor became sufficiently cheap.
Some of the advocates of subsidies seem to think it possible to induce the people to think it to their advantage to pay large enough subsidies to enable steamship lines to be run with profit to their owners in spite of dear ships, in spite of present subsidies, and in spite of the increased subsidies, which would be given as soon as we attempted to compete.
There must be some compromise between the two factions, some ground upon which they can meet in common and both unite in order to influence legislation. Neither is strong enough to succeed alone. Most protectionists will oppose free ships, fearing that free trade in one article will only start the ball rolling toward free trade in all. Then there are those who, while not hoping for a general scheme of subsidies, hope to get through their own little scheme and thus be personally benefited. There are also free traders who, while they argue for free ships only, hope to use it as an entering wedge.
While free trade may be most devoutly hoped for, the object of this essay is to show how the merchant marine may be increased, and it is hoped to draw that interest as much as possible from the clashing parties; not to put forward a scheme which would be adapted to the merchant marine under favorable circumstances, but what would best suit the existing state of affairs; in other words, a practicable scheme. The great danger of a compromise is that it suits neither side, yet all legislation of the present day is the result of a compromise, and however strong and eager the advocates of any scheme may be, they must yield somewhat to their opponents, or there will be a deadlock, then a compromise is adopted and becomes the subject of abuse for all parties.
As the French have been wisely striving to increase their carrying trade, also their shipbuilding interests, something may be gained by looking at some new laws intended to promote those interests. These laws are in addition to a subsidy already quite heavy.
The French Mercantile Marine Bill.
Article 1. The right of free pilotage is granted to all sailing vessels not measuring over 80 tons, and to steamers whose measurement does not exceed 100 tons, whenever they run regularly between port and port, and habitually frequent the entrances to rivers.
Nevertheless, at the request of the chamber of commerce, and after an inquiry in the usual form has been made, the public administrative regulations shall determine the modifications of rules which may be considered necessary in the interest of navigation.
Art. 2. For foreign-going vessels the visit of inspection prescribed by Article 225 of the Commercial Code for a fresh cargo loaded in France shall not be obligatory unless six months have elapsed since the last inspection, except the vessel may have sustained damage.
Art. 3. For the official documents or proces-verbaux, showing the changes of owners of the ship, either totally or partially, a fixed charge shall be made for registration of 5 francs. Article 5, No. 2, of the law of the 28th February, 1872, is repealed so far as it is contrary to the present provision.
Art. 4. To compensate shipbuilders for the charges fixed by the custom-house tariff, the following allowances shall be made them:
For gross tonnage: For iron or steel vessels, 60 francs; for wooden vessels of 200 tons or more, 20 francs; for wooden vessels of less than 200 tons, 10 francs; for composite vessels, 40 francs; for engines placed on board steamers, and for auxiliary apparatus, such as steam pumps, donkey engines, winches, ventilators worked by machinery, also boilers and connecting pipes, 12 francs per 100 kilog.
Ships planked with timber, having beams and ribs of iron or steel, are to be considered as composite vessels.
Art. 5. Every change in a ship by which an increase in measurement is gained shall give right to a bounty, based on the above tariff, according to the increase of tonnage gained. A similar bounty shall be granted for driving engines and auxiliary apparatus placed on board after completion of the ship.
On change of boilers the owner shall be allowed a compensation allowance of 8 francs per 100 kilog. on new boilers without the tubes, if of French make.
Art. 6. The fees granted by Articles 4 and 5 shall be paid on delivery of the ship's register by the receiver of customs at the port nearest to the place of construction.
Art. 7. The regulation of admission in bond fixed by Article 1 of the law of the 19th May, 18 16, and by Article 2 of the law of the 17th May, 1879, is abolished.
Art. 8, Shipbuilders shall receive allowances for vessels on the stocks at the time when the present laws shall come into force, as stipulated in Articles 4 and 5, after deducting the amount of custom dues fixed by the conventional tariff on foreign imports which may have been entered in bond for shipbuilding purposes.
Art. 9. As compensation for charges imposed on the mercantile navy for recruiting and the military navy, a navigation bounty shall be granted, during ten years from the date of publication of this law, to all French vessels, sailing or steam.
This bounty is applicable only to foreign-going vessels.
It is fixed at 1 franc 50 centimes per register ton and per 1000 miles run for vessels fresh off the stocks, and decreases annually by 0.075 franc for wooden vessels, 0.075 franc for composite vessels, 0.05 franc for iron vessels.
This bounty is increased by 15 per cent, for steamers built in France according to plans approved of by the marine department.
The number of miles run is calculated according to the distance from the point of departure to the point of arrival, measured on a direct maritime line.
In case of war, merchant ships can be requisitioned by the State.
Vessels used for fishing, those belonging to subsidized lines, and yachts, are excepted from receiving a bounty.
Twenty per cent, from the bounty granted by the present law shall be deducted and paid into the "Caisse des Invalides" of the marine, so as to increase the retiring pensions of registered seamen.
Art. 10. Every master of a vessel receiving a bounty fixed by Article 9 of the present law shall be obliged to carry, free of charge, mails put under his charge by the post-office authorities, or which he will deliver to their administration, as prescribed in the consular decrees of the 19th Germinal, year X.
If a post-office agent is deputed to accompany the despatches, he shall also be conveyed free of charge.
Art. 11. A regulation of public administration, containing a special statement of the distance between ports, shall fix the system on which this law shall be applied.
The above bill has already passed the Chamber of Deputies, and is now undergoing examination in the Senate.
Resume of the laws and regulations governing owners or part owners of foreign-built ships in France, which shows the privileges granted to the most favored nations.
Naturalization of Merchant Vessels purchased in Foreign Ports.
Sea-going vessels purchased in foreign ports, one-half of which at least is owned by French citizens, may be permitted to sail under the French flag. They must first pay the following duties:
1. The Import Duty, which is payable to the custom house.
2. The Transfer Duty, which is payable at the registration office.
1 . Import Duty—This duty differs according as vessels are admissible at the rates fixed by conventional tariffs or are subject to those of the general tariff.
Conventional Tariff,—Sea-going vessels are obliged to pay, according to the conventional tariffs, 2 francs per ton of their actual capacity (no deduction being made for the space occupied by machinery, coal, sleeping apartments of crew, &c.) Vessels are measured by the English method known as the Moorsom method. For the conventional tariffs to be applicable the vessel must have been built in one of the European states with which treaties of commerce have been concluded since 1860; since they were launched, moreover, such vessels must not have ceased to carry either the flag of the country in which they were built, or that of some other contracting European state. The contracting European states are England, Belgium, Italy, Switzerland, Sweden and Norway, the Netherlands, Portugal, Austria, Germany, Turkey, Russia and Spain.
General Tariff.—According to the general tariff, sea –going vessels are obliged to pay the following dues: Vessels of wood, 40 francs per ton of actual capacity, plus 4 per cent. Vessels of wood and iron, 50 francs additional, according to the law of December 30, 1873. Vessels of iron, 60 francs additional, according to the law of December 30, 1873. All vessels built in non-European countries are obliged to pay the above dues, especially those from the United States and the British colonies, including Canada; also vessels built in European countries not included in the above list.
2. Transfer Duty.—According to the law now in force, which bears date February 23, 1872, any sale of vessels either in whole or in part, is subject to a transfer duty of 2 per cent, of the value (plus the additional two decimes and the half decime.) This duty is payable both on purchases made in France and on those made in foreign ports. The custom house will not grant permission for a vessel to sail under the French flag until evidence has been furnished that the transfer duty has been regularly paid. But one exception is made to this rule, and that is in the case of a new vessel built in France or in a foreign country for the account of the person who applies for its registration in his own name.
Vessels purchased in foreign countries with a view to obtaining permission for them to sail under the French flag may be authorized by French consuls to carry the French flag temporarily, after evidence has been furnished that they have been actually purchased. To this end our consuls issue certificates to captains, which entitle their vessels and cargoes to the same usage on their arrival in a French port that is accorded to French vessels and cargoes.
The naturalization duty is as follows:
Tonnage, Amount of Duty.
Less than100 tons, 10 4/5 centimes per ton.
From 100 to 200 tons, 21 fr. 60 cent, per vessel,
From 200 to 300 tons,28 fr. 80 cent, per vessel
300 tons and upward, 28 fr. 80 cent per vessel and 7 fr, 20 cent, for each additional 100 tons.
Any fraction of 100 tons is considered as 100 tons.
These regulations and laws are very enlightened in comparison with ours, but it will be necessary for us to be even more liberal. We must repeal all the laws governing the registration of vessels, and in lieu enact laws similar to the following:
1. Vessels registered pursuant to law, and such as shall be duly qualified according to law for carrying on the coasting trade and fisheries, or one of them, shall be deemed vessels of the United States, and entitled to the benefits and privileges appertaining to such vessels; but they shall not enjoy the same longer than they continue to be wholly officered by citizens of the United States,
2. Any and all vessels wholly officered by citizens of the United States may be registered as directed in this title.
Also, such laws as are necessary for carrying out the above.
This would be a concession by the protectionists, but it is necessary, and would assist instead of injuring shipbuilders. The officers are required to be citizens because it is necessary for the safety of the state to encourage this class, and would ensure the vessels remaining under the flag as long as properly protected.
Retain the law requiring all enrolled and licensed vessels to be built in the United States, and allow them the privileges of registered vessels after giving such notification as is necessary to prevent smuggling. The retention of this law is necessary for the protection of shipbuilding, and the protection of shipbuilding is necessary to the safety of the state. Moreover, experience shows that the saying of Mr. Roach, "that no country can have a large carrying trade which has not a large shipbuilding interest," is true.
Repeal all laws for state taxation, and remit the taxation imposed by the general government to all vessels carrying the American flag.
Encourage shipbuilding by bounties, as in the proposed French laws.
Now come subsidies. It is not meant to recommend subsidies as heretofore granted; nothing could be more ruinous, nothing more demoralizing. An ample scheme of subsidies is necessary, which shall be given, as far as possible, where it will benefit public and not private ends. It need not take the form of a direct gift, but may be a guarantee of a certain percentage on the capital invested. Let the routes which will have subsidized lines be few at first, to be gradually enlarged in number as the success of the plan is proven; try only one or two lines, but let the subsidy be sufficient and certain.
It would be almost madness to try to establish more Atlantic lines at present; except possibly one from Savannah or some other Southern port, where a direct line to England, carrying cotton, etc., and bringing back European manufactures, might be successful with a reasonable subsidy. But lines to Mexico, Central America, and especially South American ports, might be made a success. There would be less opposition to encounter on such lines, there are demands for vessels from these ports, and our general policy of maintaining our supremacy on this continent would be greatly aided by such lines. Now these lines might be made to pay pecuniarily, as well as be according to the dictates of a sound policy, by the increased receipts from custom dues. In the case of the Pacific Mail, the increased revenue from 1867 to June 30th, 1876, was about $1,500,000 over and above the subsidy, and the actual gain in wealth to the United States by increased trade was enormous. On certain lines which should be approved of beforehand the government should guarantee a certain per cent, on the capital invested, until such a time as the government inspector should find that the receipts of the line were sufficient to pay the necessary interest. The amount of interest should be fixed by a sliding scale, dependent upon the earnings of the company and the ruling rate of interest for that time. This would be a less dangerous and more economical form of subsidy than giving it in a lump sum. As such lines were found to reimburse the government by increased revenue, new lines could be started until our carrying trade bore a just proportion to our needs, and we were placed in a reasonably safe condition in case of war. That there are ports where American lines would greatly advance American business and commerce is conclusively shown by the consular reports, from various portions of the globe, published in "The Commercial Relations of the United States."
There must be made another concession in the direction of free trade, and that is in the tariff laws. For against the products of many American states our tariff amounts to prohibition, and in most cases it protects very small interests and benefits only a few men. But all who coin money by our tariff system, a system of protection for the few at the expense of the many, are united by their interests, which are plain and manifest; while those who are injured are affected more indirectly, and are hard to unite on any plan. Still the country is becoming rapidly educated in the laws and advantages of free trade, and concessions must soon be made. The cry for a revision of the tariff is becoming so strong that the laws will be revised, and although it may be long before we can have a tariff for revenue only, steps will be taken in that direction, a compromise will be effected.
Commissioner of Commerce.
To regulate the varied affairs of commerce, the carrying trade, and shipbuilding, an executive head will be required, with the necessary force under his control. A Commissioner of Commerce will be needed, to see that the laws are carried into effect, to note their operation and to recommend changes. And it may be hoped that under intelligent direction the various branches will become so important as to justify the bureau under his direction being erected into a department. For the present there is a good nucleus for such a Bureau in the Treasury Department, where all the statistics regarding our commerce, etc., are gathered and the present navigation laws administered. But the work needs to be gathered from the different bureaux among which it is now distributed, and placed under one head, so that some definite plan of action may be carried out; and there is needed the same partial independence as is held by the Commissioners of Patents, Agriculture, etc.
By collecting his data he will be able to recommend where the subsidies are to be placed, how much money will be needed, etc.
But what will avail all these inducements if our government cannot guarantee ample protection to the capital invested; and how can such a guarantee be maintained without a decent naval force? Of course if we are to have no wars we need but few vessels to fulfill the duties of peace. But the belief in universal peace is not strong enough to induce capitalists to risk their money without some show
of protection. At present the only security to our flag when flown abroad, is the absence of desire or interest to offend. The small empire of Japan has a navy with which ours is unworthy of comparison.
In our late rebellion the want of adequate protection was severely felt, and a blow was dealt, by a few light cruisers, to our merchant marine from which it has never recovered. But during this war we showed a facility in raising a naval force which has served to lull the country into fancied security. This feeling of security has been maintained until quite recently by reports of increased efficiency, the untruth of which was more apparent to the naval officer than to the general public.
Modern warfare afloat can no longer be conducted as of old, where courage and daring could supply the lack of power. What courage would enable the wooden vessel to stand up against one heavily armored? Or how would daring avail in a slow steamer? Many are now of the opinion that we have nearly reached a period analogous to that when land troops threw off their armor, and that guns will so far surpass armor that it will only be an unnecessary burden. But whether we fight at sea with armored or unarmored vessels, we must use all modern appliances. A man-of-war requires time and money for building, and the necessary plant cannot be supplied rapidly under the pressure of necessity. A vessel-of-war has become a scientific instrument, and requires intimate knowledge of all its parts for successful handling.
While in theoretical knowledge our officers are second to none, and are ahead of most, in practical knowledge they are far behind many. In fleet tactics they have had no experience since that motley crowd of vessels were assembled at Key West, and the experience there gained was about as useful as the experience of a raftsman would be to the master of a large ocean steamer. Of fleet tactics, ramming tactics, helm angle, etc., our officers have no practical experience.
Our ram and torpedo boat has just been successfully repaired, and she can now make the wonderful speed of eleven knots, so that if she can only find, in case of war, some of the enemy who have, by accident, been reduced to that speed she will no doubt be able to do great execution. No doubt she has spread her fame abroad and thus added greatly to the protection afforded by the American flag. Property on water is like property on land, its value deteriorates or enhances in proportion to its security. And even with subsidies the profits are not large enough to induce capitalists to invest, if insecure, even when speculative mania is abroad and almost any scheme can draw money from the speculator.
The navy and the merchant marine must go hand in hand. Whatever capital is invested in shipping becomes interested in the navy, and without such an interest being created, adequate appropriations for a naval force cannot be obtained.
Even with our present small merchant marine the want of proper protection has been felt. The flag of the United States has been insulted by Spain, and there was not sufficient force to avenge the insult. With a stronger force our policy might have been stronger. The show of force we then made was a balloon which may have deceived the Spaniards, but which would have been punctured by the first rifle-shot fired.
There is an apparent awakening to the condition and needs of our navy. A board of naval officers has been ordered, and is deliberating upon a plan for building up a navy commensurate to our wants. May this augur well for our merchant marine! This plan being approved by the Secretary of the Navy, and urged by him upon Congress, the necessary funds may be obtained for building up a nucleus for our navy of the future; and when the foreign carrying trade assumes its just proportions, the navy growing with it will be able to protect it from foreign aggression, as well as to extend it the hand of brotherly aid in all portions of the globe where commerce may call, and American enterprise send, the Stars and Stripes.
The new vessels which must be built will afford encouragement and assistance to our shipbuilders, and thus indirectly assist our carrying trade.
The Nicaragua Canal.
The mass of our Eastern States are destined to become great in manufactures. Even now, the Southeastern, having somewhat recovered from the effects of slave labor, are raising large manufacturing establishments. The State of Georgia has made immense strides since the war. Our Northeastern States have long been centres of manufacturing industry.
The Pacific slope is an immense grain-field, and adding to its acres under culture every day in the Northwest. For a free exchange of commodities between the two slopes a shorter water route is needed. Freights by land are too expensive for the more bulky articles. A canal connecting the two oceans would give great impetus to trade between the two slopes, and would not injure the railroads, which on the contrary would share in the increase of business due to increased prosperity. Of course, as far as our carrying trade is concerned any other route than the Nicaraguan will do, provided such route can be used for the purpose; but so far as our present information goes (and it does not appear as if further information would give different results), the Nicaraguan Canal is the only feasible scheme. It has little to fear from such visionary schemes as De Lessep's sea level canal or Eads' ship railway; they may draw away money which would otherwise be invested in the Nicaraguan Canal, but they will fall to the ground when actually attempted!
This canal will also open out a large trade with the western coast of Mexico, Central and South America. As the trade between our Eastern and Western coasts must be carried on in enrolled vessels, there will be a large demand for American-built steamers. May our shipbuilders be ready and able to supply this demand.
The various laws of compulsory pilotage are a severe tax on any regular line of vessels, as they are required either to take a pilot or pay half pilotage, when in most cases the master of the vessel is able to perform all the duties required of a pilot. It is an unjust tax on the commerce and shipping of the country. Why should this body of men require special protection? It would be as just, and far more beneficial, to tax them for the support of dockyards and require them to use and pay for the docks or pay half dockage fees. The supply of pilots will equal the demand if not interfered with by laws, and the owners may be left safely to consider the security of their property and employ pilots where and when necessary. There are few of our ports where the master of a steamship would not soon be able to take his vessel in and out with safety. With sailing vessels it is different; when obliged to beat up the channel the ranges must be well known, every foot of ground and all the currents familiar. The legality of these State laws is doubtful; they appear to conflict with the constitutional power of Congress to regulate all affairs of commerce, both foreign and between States. our merchant marine.
Our Diplomatic and Consular Service.
Any improvement in our diplomatic and consular service would be an aid to our commerce and carrying trade. But if they were formed into a permanent corps somewhat upon the model of Great Britain's service, it would be of great assistance. Even now the reports of Consuls and Commercial Agents are of considerable value; but how much more valuable would they be if they had some certainty of tenure of office, and if the excellence of their reports were a test of their fitness for promotion. How carefully would every chance of increasing our commerce be watched, and every means of aiding our marine be seized.
Our only foreign policy is embodied in the so-called "Monroe doctrine," therefore our diplomats have little else to do besides look after our commercial interests and seek after favorable opportunities for advantageous treaties. So let them be men who are familiar with our commercial and shipping interests. In those ports where our Ministers and Consuls have ex-territorial jurisdiction it is necessary to have lawyers, but they can look after our other interests as well, if sufficient inducements are held forth.
The principal means, then, to be taken for the revival of our merchant marine are: first, the alteration of the Navigation Laws so as to admit any vessel to American register. To allow any one to invest his money in shipping. To allow an American-built registered vessel all the privileges of a licensed or enrolled vessel. To remit the tonnage tax, repeal the laws for State taxation, and compulsory pilotage laws. To pass a comprehensive scheme of subsidies. To place the three interests, so closely bound together that it is almost impossible to treat of them separately, commerce, the carrying trade, and shipbuilding, under a Commissioner of Commerce. And to build a navy that will guarantee protection to the capital now invested, and to build it on such a basis that it may grow with the merchant marine, and render certain the carrying of our flag secure and honorable in all portions of the navigable waters of the globe.